Last month, a notice of arbitration was served on the Indian government on behalf of Strategic Infrasol Foodstuff and Thakur Family Trust UAE Joint VentureNauzer Bharucha | TNN | Updated: November 05, 2015, 14:01 IST

A tussle over two large property redevelopment projects in the city may head to an international arbitration court, with two UAE firms claiming Rs 5 lakh crore ($85 billion) as compensation, perhaps the highest arbitration demand in India's history .

An SP Group source said on Wednesday the charges are "wholly false, baseless, unjustified and made with malafide and malicious intent to harm and damage Shapoorji Pallonji's reputation and cause financial loss". It is absurd to claim that the Indian government is anyway involved in these projects and to state that the "claimants feel that the Republic of India has become a party", the source added, saying the government should take serious note of such "motivated allegations". The source also denied that the SP Group had dealings with the Thakur Family Trust.

"The Indian government has been made a respondent because these lands belong to various government agencies," said advocate Anil Chawla, whose firm represents the UAE companies. He added that the government agencies also wrongly recognised SP's right over theirs. The Rs 5 lakh crore demand has been calculated by estimating the profits that would accrue to the developer from these two plots, he said.

The claimants said they , along with a consortium of Indian companies, had spent over Rs 250 crore to start redevelopment of 1,308 acres of slum sprawl on salt pan land at Ghatkopar and a 56-acre MHADA (Maharashtra Housing and Area Development Authority) colony called Samata Nagar in Kandivli. Later, they roped in SP as a JV partner for both the projects.

The Ghatkopar salt pan lands belong to the Centre, which were on lease to a company of the Garodia Group."Freeing up the salt pan lands for development was made possible with inputs provided by the claimants and the consortium," they said. They worked on these projects since 1998, which "eventually yielded a staggering inprinciple approval for creation of constructed floor space of 270 million sq ft". The consortium's "patent-pending redevelopment strategy" has apotential to upgrade a total of 60,000 tenants from unsafe housing in MHADA colonies at the two projects to 15,000 clean, safe and modern units.In addition, it promised to give the state government over 152,000 free housing units.

The UAE firms said they collaborated with the SP Group for financial support and help with construction activities. "The SP Group betrayed the consortium... and expropriated our rights by using forged documents," said the arbitration notice.

The notice alleged that various organs of the Republic of India actively supported the "fraudulent efforts... by believing... the forged documents".